EU chief Tusk says will 'respond in kind' if US imposes tariffs on France over digital tax

The European Union will "respond in kind" if the U.S. imposes tariffs on France over digital tax plan, Donald Tusk, president of the European Council said on Saturday.

Speaking at the G-7 leaders meet in Biarritz in France, Tusk said if President Donald Trump uses tariffs for political reasons then it can be risk for the whole world, including the EU, Reuters reported. 

Earlier on Saturday, Trump criticized the French digital tax aimed at big U.S. technology companies and threatened again to retaliate by taxing French wine.

Speaking to reporters at the White House before leaving for a Group of Seven summit in France, Trump said he is not a "big fan" of tech companies but "those are great American companies and frankly I don't want France going out and taxing our companies."

"And if they do that ... we'll be taxing their wine like they've never seen before," he said according to Reuters.

France passed a 3% tax in July that targets roughly 30 big tech companies including Facebook, Amazon and Google. The levy applies to companies with more than 750 million euros ($830 million) in annual revenues from "digital activities," including 25 million euros ($27 million) from within France.

What is a digital tax?
What is a digital tax?

France pushed forward with the tax after a broader EU-wide effort failed last year. Now other countries like the U.K., Italy and Austria are considering enacting their own versions of a digital tax. France's government has said the measure will raise 500 million euros per year.

The U.S. Trade Representative launched an investigation into France's digital tax, saying it "unfairly targets American companies." President Donald Trump has threatened to impose tariffs on French wine in response to the measure.

Big U.S. tech companies have strongly opposed France's digital tax, saying they would prefer a multilateral agreement. Amazon has also said it will pass some of the costs of the new measure down to thousands of small and medium-sized French businesses selling on its platform. The Organization for Economic Cooperation and Development (OECD) is currently reviewing digital taxation but has said it won't reach a conclusion until next year.

- Reuters contributed to this report.